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September 30, 2016

1.   Call to Order

Joseph Muniz called to order the meeting of the TSBVI Board Committee on Audit, Compliance, and Management Review at 8:00 a.m. on September 30, 2016 in Room 104 of the Main Administration Building 600, 1100 W. 45th Street, Austin, Texas.  Committee member Mary Alexander was also present.  Tobie Wortham was unable to attend the meeting.  TSBVI staff members participating in the meeting were Bill Daugherty, Superintendent ; Jaye Stepp, Internal Auditor; Ken Miller, Director of Policy Development, and Susan Houghtling, Director of Planning and Evaluation.

2.  Consideration of Approval of Minutes of the April 8, 2016 Meeting

Mary Alexander moved that the minutes of the April 8, 2016 meeting be approved and Mr. Muniz seconded the motion.  All Committee members were in favor of the motion.

3.   Consideration of Approval of Board Policies – Policies BBFA and CFCA

Ken Miller presented Policy BBFA related to Board member conflict of interest disclosures.  He explained that Board members may not have a direct or indirect interest, including financially, in the activities of the School that causes a conflict of interest in discharging their duties as a board member.  Mr. Miller briefly reviewed the policy and noted requirements for Board members to file a financial statement annually and on time with the Texas Ethics Commission.  New board members must file the statement no later than 45 days after assuming the duties of the position.

One change was recommended for Policy BBFA – to change the wording “Board of Governors” to “Board of Trustees” wherever it occurred in the policy.

Mr. Muniz stated that he had notified the Texas Ethics Commission of his concerns about the lack of accessibility of the financial statement forms.

Mrs. Alexander moved that Policy BBFA be approved as presented with the changes to the term “Board of Governors” to “Board of Trustees”.  Mr. Muniz seconded the motion and all board members were in favor of the motion.

Jaye Stepp introduced amended Policy CFCA – the Internal Audit Charter and briefly reviewed its contents.  Changes in the policy reflect amendments made in the Institute of Internal Auditors Model Charter regarding what effective internal auditing looks like in practice.  Minor editorial changes were also made.

Mrs. Alexander moved that Policy CFCA be approved as presented and Mr. Muniz seconded the motion.  All board members were in favor of the motion.

4.  Report from the Internal Auditor, Jaye Stepp

a.   Approval of the Property Management Audit

Jaye Stepp reported that the audit of property management resulted in three recommendations on procedure review, staff training and automation of processes.  Procedure B.1.9 on property accounting as well as departmental procedures need to be updated to reflect current practices and be communicated to staff. 

Training for all TSBVI staff needs to be developed regarding property responsibility.  Training for staff who have technology equipment responsibilities needs to be developed.   Staff with access to SPA were to complete the SPA Core Training Video Tutorials on the Comptroller’s website no later than today. 

Improvements in automation of processes to transfer property need to be made.  There is confusion about whether to capitalize some items which would require warehouse staff to number, track and inventory them.  Small and portable technology equipment that is used in the community should be numbered with a TSBVI sticker and phone number.  If property that requires tracking is received in departments other than the warehouse, information about its receipt should be communicated to the warehouse.  Property with a value from $500 up to $5,000 is controlled by the School and property with a value of $5,000 and over needs to be capitalized.  A recommendation was made by Ms. Stepp to purchase a bar coding system to make inventory much faster and limit errors that occur through the current manual process.

Some issues were noted with no year-end adjustments being made for missing property in the SPA system.

Mr. Daugherty added that some of the issues identified were related to the published procedure not reflecting actual practice.

Mr. Muniz expressed concern that some items have been missing for years but stated his confidence that the new CFO would correct the problem.

Ms. Stepp said that she will report to the Board in January and June on the status of completion of tasks related to prior audit recommendations.  TSBVI staff are supposed to let her know when they complete the tasks.

Mrs. Alexander responded that it might not be the best use of Ms. Stepp’s time to follow-up on prior recommendations.  Instead, staff should be proactive and keep her informed.

Ms. Alexander moved that the Property Management Audit be approved as presented and Mr. Muniz seconded the motion.  All board members were in favor of the motion.

b.   Consideration of Approval of the Annual Internal Audit Report

Ms. Stepp explained that Texas Government Code requires that an agency’s Annual Internal Audit Report must be posted on its website along with the Annual Internal Audit Plan.  Ms. Stepp briefly reviewed the proposed Annual Internal Audit Report for FY (fiscal year) 2016.  Four audit areas were proposed in FY 2016 and three were completed with the contract management audit being carried forward to FY 2017. 

Ms. Stepp reported that all recommendations from the 2015 External Quality Assurance Audit of TSBVI’s internal audit program were completed.  

Three audits were approved by the Board for FY 2017 at the last Board meeting including an audit on student abuse, neglect and exploitation.  Ms. Stepp said she wants to include a review of sexual harassment and bullying policies during this audit and this might increase the number of hours identified to complete the audit beyond the initial 250 hours that were approved.  A second scheduled audit on TAC-202 Information Security includes 234 elements to address.  The last audit for FY 2017 will be on contract management.  An additional 20 hours of work for contingency was added in the plan approved by the Board in August.

Ms. Stepp reviewed additional risks that had been ranked as “high” but not included in the current Internal Audit Plan including when they were last audited.

Lastly, Ms. Stepp reported that the School is in compliance with requirements for reporting fraud as stated in the General Appropriations Act.  How to report fraud is posted on the School’s Intranet and Internet site as required and a fraud policy is in place.

Ms. Alexander moved and Mr. Muniz seconded the motion to approve the Annual Internal Audit Report.  All members were in favor of the motion.

c.   Report on the Quality Assurance and Improvement Program (QAIP)

Ms. Stepp stated that this report provides a summary of the work she does ensure the quality of her audit work.  The report includes internal assessment guidelines including using audit policies and procedures, reviewing customer surveys following audits, and analyzing performance metrics to improve the process.  Ms. Stepp reported that she does not receive much feedback through surveys.  She reviewed performance metrics in the report in the areas of administrative activities, annual reviews and updates, periodic reports, etc.  Her work on SAIAF tasks is talking a lot of time including serving as a recorder and working with the Peer Review Committee.

Ms. Stepp reviewed training she has received or will receive from the time period of May 1, 2014 through November 19, 2016.

Mr. Daugherty said that Ms. Stepp does a fine job, is thorough and her work is appreciated.  He assured the Board there would be a more rapid turn-around on completing audit recommendations.

5.  Adjournment

Mr. Muniz announced that there would be no Audit Committee meeting in November.

Mrs. Alexander moved to adjourn the meeting at 9:07 a.m. and Mr. Muniz seconded the motion.  All Board members were in favor of the motion.